Meanwhile, refinance applications fall for the seventh week in a row
Pent-up demand and record-low mortgage rates prompted an uptick in purchase activity this week.
Overall, mortgage applications dropped 3.9% on a seasonally adjusted basis and 14% on an unadjusted basis from last week, according to the Mortgage Bankers Association's Market Composite Index. Despite the decrease, the seasonally adjusted purchase index was 5% higher than a week ago, while the refinance index was down by 9%.
After hitting a peak of 76% earlier this year, the refinance share of mortgage activity now accounts for 59.5% of total applications, down from 62.6% week over week. According to MBA, the refinance index is at its lowest level since Feb. 21.
"Purchase applications continued their recent ascent, increasing 5% last week and 18% compared to a year ago," said Joel Kan, associate vice president of economic and industry forecasting at MBA. "In contrast to the upswing in purchase activity, refinance applications fell for the seventh consecutive week – even as the 30-year fixed-rate hit another MBA survey-low of 3.37%."
Kan explained that demand from homebuyers returning to the market continues to support the housing market's recovery from the coronavirus recession
"However, there are still many households affected by the widespread job losses and current economic downturn," Kan said. "High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months."
The share of adjustable-rate mortgages and USDA loans edged up to 3.5% and 0.7% of total applications, while the FHA share of activity held steady at 11.2%. The VA share of total applications dipped four basis points week over week to 12%.
Average contract rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.37% from 3.42%, with points decreasing to 0.30 from 0.33 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.66% from 3.71%, with points increasing to 0.30 from 0.29 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.46% from 3.41%, with points decreasing to 0.23 from 0.30 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.85% from 2.87%, with points decreasing to 0.27 from 0.30 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs decreased to 3.05% from 3.08%, with points increasing to 0.25 from 0.01 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
